Interceramic, Inc. v. S. Orient R.R. Co.

• Decision Date: 16 September 1999
• Docket Number: No. 06-98-00158-CV,06-98-00158-CV
• Citation: 999 S.W.2d 920
• Parties: (Tex.App.-Texarkana 1999) INTERCERAMIC, INC. d/b/a INTERCERAMIC, USA, Appellant V. SOUTH ORIENT RAILROAD COMPANY, LTD., Appellee Submitted:
• Court: Texas Court of Appeals

Page 920

999 S.W.2d 920 (Tex.App.-Texarkana 1999)

INTERCERAMIC, INC. d/b/a INTERCERAMIC, USA, Appellant

V.

SOUTH ORIENT RAILROAD COMPANY, LTD., Appellee

No. 06-98-00158-CV

In The Court of Appeals Sixth Appellate District of Texas at Texarkana

Submitted: September 16, 1999

Decided: September 17, 1999

Rehearing Overruled Oct. 13, 1999.

On Appeal from the 95th Judicial District Court Dallas County, Texas Trial Court No. 97-02678-D

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

Before Cornelius, C.J., Grant and Ross, JJ.

O P I N I O N

William J. Cornelius, Chief Justice

Interceramic, Inc. appeals from an adverse judgment in a breach of contract suit tried to the court. South Orient Railroad Company sued Interceramic for breach of contract because Interceramic failed to ship an agreed volume of ceramic tile from Chihuahua, Mexico to Garland, Texas, via the railroad. Interceramic filed a counterclaim alleging that the Railroad failed to timely deliver the tiles that had been shipped according to the contract. The trial court found in favor of the Railroad on all issues and rendered judgment for the Railroad for $564,052.32 in damages, plus interest and attorney's fees. The court made extensive findings of fact and conclusions of law in support of its judgment.

The Railroad and Interceramic entered into a one-year contract on August 18, 1995, in which the Railroad agreed to transport tiles to and from Interceramic's Chihuahua plants to warehouses in Garland. The Railroad also agreed to move the tiles by truck, called drayage, from the train station to Interceramic's warehouses. The Railroad agreed to provide service at least three times per week. Interceramic guaranteed that it would ship a minimum of ten loads per train from Chihuahua to Garland, or thirty loads or loaded vans per week. Invoicing and payment was to be made twice a month.

It is undisputed that Interceramic never met the volume requirements of the contract. During the entire contract term, it shipped only 234 vans by rail. Before the end of the one-year term of the contract, at the end of June 1996, the Railroad stopped service. The trial court found that the Railroad stopped service in order to mitigate its losses after Interceramic failed to ship the required number of loads, and the court reduced damages accordingly.

On appeal, Interceramic contends that the judgment is erroneous because its failure to ship the required quantities was excused by a prior breach by the Railroad; the Railroad waived its right to enforce the volume provision of the contract by waiting until the expiration of the contract to seek enforcement; the calculation of damages is defective; and the trial court abused its discretion by admitting expert witness testimony that was provided by supplementation only eight days before trial.

Interceramic contends that the Railroad breached the contract because the contract required the Railroad to provide timely drayage for the tiles from the railroad station to the Interceramic warehouses. Interceramic contends that this failure to provide timely drayage was the first breach of the contract, and that it excused its own failure to ship the agreed loads of tiles.

Whether a party has breached a contract is a question of law, not a question of fact. Lafarge Corp. v. Wolff, Inc., 977 S.W.2d 181, 186 (Tex. App.Austin 1998, pet. denied); Garza v. Southland Corp., 836 S.W.2d 214, 219 (Tex. App.Houston [14th Dist.] 1992, no writ). In this case, the court also acted as the fact finder, so it was responsible for determining the disputed facts as well as applying the law to those facts.

When a party materially breaches a contract, the other party may treat the contract as ended and cease performance. Thus, a party who fails to perform his obligation may not thereafter enforce the remaining terms of the contract against the other party. Hernandez v. Gulf Group Lloyds, 875 S.W.2d 691, 692 (Tex. 1994); Graco Robotics, Inc. v. Oaklawn Bank, 914 S.W.2d 633, 641 (Tex. App.Texarkana 1995, writ dism'd); Morgan v. Singley, 560 S.W.2d 746, 748 (Tex. Civ. App.Texarkana 1977, no writ).

The first issue is whether the trial court erred by finding and concluding that the Railroad did not breach the contract.

Interceramic argues that the contract requires the Railroad to provide timely drayage of the loads between the railroad station and its warehouses, and that the Railroad did not meet that requirement. Thus, it argues that the trial court erred by concluding that the Railroad did not breach the contract. The initial question is whether the contract requires such performance. It does not. The contract states only that the service will include "all drayage, ramping and de-ramping, etc." It does not give any specifications whatsoever for the drayage. There is no requirement that transport be completed within any particular length of time.

Where a contract calls for certain performance, but expresses no time for that performance, the law implies that a reasonable time was contemplated. Interceramic, however, never raised the issue of reasonable time with the trial court, and it does not contend on appeal that the rule of reasonableness should be applied.

The trial court found that the contract does not specify a delivery schedule, that Interceramic unilaterally implemented specific appointment times for the drayage after the contract was signed, and that Interceramic's signatory to the contract, Dave Corey, misled the Railroad regarding those appointments. These findings, which are supported by evidence, are sufficient to support the trial court's conclusion that the Railroad did not breach the contract in its performance of the drayage.

Interceramic apparently contends that the signed contract is not the sole document comprising the contract, and that a letter it wrote to the Railroad a week after the contract was signed should be considered as a component of the contract, or at least should have been considered by the trial court in construing the contract. The trial court clearly considered only the signed contract, as is reflected by the language used in its findings of fact. There is no finding of fact addressing the letter, and there is no complaint on appeal that the trial court erred by failing to consider the two documents as a single contractual entity. Accordingly, we will restrict our review to Interceramic's contention on appeal, i.e., that the letter provides evidence from which we should conclude that the court erroneously interpreted the terms of the contract.

Interceramic bears a difficult burden. In a bench trial in which the sufficiency of the evidence is challenged, the trial court's findings are reviewed for legal and factual sufficiency using the same standards as used in reviewing jury findings. Okon v. Levy, 612 S.W.2d 938, 941 (Tex. Civ. App.Dallas 1981, writ ref'd n.r.e.). The trial court has the right to believe or disbelieve evidence as it sees fit and to resolve conflicts in the evidence.

The only portion of the contract itself that is relevant to this issue is quoted above, and it contains no specifics about the time or manner of the drayage. The letter on which Interceramic relies contains language first confirming the volume of freight and then stating:

However, if your drayage company is not able to pickup [sic] these orders, then we will have to move these orders by normal truck service so we can meet our delivery dates. In addition, it is very important that the Dallas/Ft. Worth drayage company call our Warehouse to arrange for delivery appointments. Otherwise, the loads delivered without appointments will tie up our docks and create a good deal of congestion.

The contract contains no provision specifying delivery times. Nor does the letter. Further, the trial court found that Interceramic never complained about the drayage, but simply placed other carriers ahead of the Railroad for transporting the tiles, and specified the use of alternative carriers rather than the Railroad. The court further found that the schedules for delivery that were eventually communicated to the Railroad were not the same schedules that had originally been discussed.¹

The contract is not ambiguous as to the specifics of the drayage. It is simply silent. Although the letter could be construed to indicate that the parties contemplated that timely drayage would be required, it is by no means conclusive on that point. Indeed, the letter contains absolutely no specific information about the timing of drayage. Thus, even if we agreed that the letter was a part of the contract or demonstrated the parties' own construction of the contract, it does not constitute conclusive evidence so as to make the trial court's finding erroneous.

Interceramic next contends that the Railroad waived any right to enforce the contract because it did not seek to enforce the volume provisions until after the contract had expired. As the trier of facts on the issue of waiver, the trial court assessed the credibility of the witnesses and the weight to be given their testimony. In so doing, the court could believe any witness and disbelieve other witnesses, resolve inconsistencies in the testimony of any witness as well as in the testimony of different witnesses, and arrive at the facts deemed most reliable under the evidence. McGalliard v. Kuhlmann, 722 S.W.2d 694, 697 (Tex. 1986); Shaver v. Schuster, 815 S.W.2d 818, 825 (Tex. App.Amarillo 1991, no writ).

The affirmative defense of waiver may be asserted against a party who intentionally relinquishes a known right or engages in intentional conduct inconsistent with claiming that right. Tenneco Inc. v. Enterprise Prods. Co., 925 S.W.2d 640, 643 (Tex. 1996). A waivable right may spring from law or, as in this case, from a contract. Id.; Ford v. Culbertson, 158 Tex. 124, 308 S.W.2d 855, 865 (1958); see Alford, Meroney & Co. v. Rowe, 619 S.W.2d 210, 213 (Tex. Civ. App.Amarillo 1981, writ...